Friday, June 20, 2014

PSUs to have 25% public holding, SEBI unveils reforms

IN A major decision that is likely to impact the shareholding pattern of as many as 36 public sector undertakings (PSUs), capital market regulator the Securities and Exchange Board of India (SEBI) on June 19 decided to raise public holding in all public sector undertakings...
to a minimum 25 percent.
In these PSUs the government currently owns more than 75 percent.
The biggest dilution will have to be made in Coal India. The market regulator has said that the government will be given a three year time frame to achieve 25 percent minimum public shareholding (MPS).
Currently, PSUs have to maintain 10 percent of minimum public shareholding, while private companies are required to maintain 25 percent. Now, the PSUs will be given three years to achieve minimum public shareholding of 25 per cent or Rs.400 crore, whichever is lower, for companies with post capitalisation of less than Rs.4,000 crore.
The capital market regulator at its board meeting here also decided changes in the offer-for-sale mechanism where 10 percent of the issue size will be reserved for retail investors.
Retail investors may also be offered discount. Retail investors are those who are bidding for amount less than Rs.2 lakh.
In a release, SEBI said the board reviewed "the extant regulatory framework in the primary market" and approved the reforms to "revitalize" the market.
This will remove the anomaly that a company just short of Rs.4,000 crore market capitalisation, was required to dilute about Rs.1,000 crore while another company at Rs.4,000 crore market capitalisation was required to dilute only Rs.400 crore.
SEBI also decided to increase the anchor investors’ bucket to 60 percent from the current requirement of 30 percent of the institutional bracket. The board approved the proposal to permit bonus shares issued in last one year.

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